STATISTICS Canada reports sometimes can be irrelevant to topical agricultural debates because they look backward, usually reporting information about years already past. What’s important is what’s happening now.
But an October report by the federal agency on the 2007 agricultural economy offers an intriguing glimpse into the broader trends that affect farmers this year.
Like 2008, last year was volatile for farmers as the dollar escalated in value, input costs soared and in some grain sectors, commodity prices hit record highs.
At the same time, because agriculture is such a complex industry, great news in the grain and oilseed sector was bad news in the livestock sectors hit by higher feed costs and lower prices because of a high Canadian dollar.
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The Statistics Canada report, as well as a food price index report last week, offered an intriguing glimpse into what might be happening this year. It also raises questions about what strains the Conservative-revised farm safety net program will face.
High grain and oilseed prices helped create record farm cash receipts last year but those records helped sink sectors, mainly livestock, that see grain-based feed as a main input cost.
And even in the grain sector blessed with great returns after years of stagnant incomes or losses, sharply higher input costs swallowed up most of the increased revenue.
Meanwhile, higher gross returns reduced the amount of farm support the federal government sent out.
So this year, and in particular this autumn, commodity prices are falling and the Canadian dollar has lost more than 20 percent of its value. The lower dollar will increase the value of exports and falling grain prices will lower livestock costs.
But at the core of the issue remains the fact illustrated in the federal numbers that while agricultural commodity prices fluctuate, input costs rise and rarely fall.
While farmers in some sectors see their farmgate price decline, supermarket prices for products made from their cheaper products rarely go down.
There is a disconnect between what consumers hear about commodity prices and what is happening in farmer take-home pay.
There is a disconnect between what consumers pay for food products and what farmers receive. It is not unlike the disconnect between what oil companies receive for their barrels and what diesel fill-ups cost, but that is a different column.
Late last week, agricultural economists from across Canada gathered in Ottawa to talk about how their work could be more relevant to the national policy debate.
The answer stares them in the face.
Research and publish analysis about how consumer prices could be increasing while farm prices are falling. Is it food industry corporate concentration?
Research and publish analysis on the amazing ability of input companies to raise prices in a way that captures almost all of any farm windfall that the market produces.
Research and publish analysis on the impact of more than doubling farm debt in the past 15 years and the fact that debt servicing charges are now one of the fastest-growing farm input cost increases.
There are issues out there.
No one should expect Agriculture Canada with its agenda of “good times are here again” to explore them. Go for it.
